I have not yet tried Mandrake, but to be sure there are two ways (or many ways) of solving your problem.
1.) Edit your erroneous /boot/grub/menu.lst --DO THIS:
herohito@host-$: sudo gedit /boot/grub/menu.lst (you can use other editors, vi, vim, etc.) <enter password if required>
(Once the editor opens menu.lst put this entry into one stanza--)
kernel /boot/vmlinuz root=/dev/hda3 acpi=ht quiet splash
Save the menu.lst and quit the editor.
Reboot your machine, see if this works.
Another way is--
2) Boot your Linux installer, once booted mount your Linux partition then go to grub prompt:
installer@host-$: sudo grub
grub> root (hd0,2)
grub> grub-install /dev/hda
In the No.2 solution you have written stage 1 to MBR, so your win98 will not be chainloaded at grub until you have editted again your /boot/grub/menu.lst.
You can edit the menu.lst at your linux by doing this--
herohito@host-$: sudo gedit /boot/grub/menu.lst (you can use other editors, vi, vim, etc)
Put this stanza into the menu.lst--
You will have multiboot running in grub.
There are other ways of solving or playing with grub to meet your needs. Let me advise your good self to read this tutorial http://www.dedoimedo.com/computers/grub.html
Hope this helps.